tv Bloomberg Markets Americas Bloomberg December 8, 2017 2:00pm-3:30pm EST
scarlet: we are live at bloomberg world headquarters in new york over the next hour. here are the top stories we are covering on the bloomberg and from around the world. one of the top list economists joining us for the hour. ellen zentner speaks to us on a --e range of top topics. and where does great growth stand? and british prime minister -- are reaching a deal after marathon negotiations. what it would mean for u.s. investors and the u.s. economy. have u.s. markets closing in two hours time. julie hyman has more on the markets. a goldilocks jobs report. >> it seems that way. you had the growth, the unemployment rate alternate 4.1%.
wage growth is not fitting into that equation in the same way, however. i know you will dig into a little bit more. and you will gain in stocks today, not a huge one but enough to put the dow and s&p at closing records. the nasdaqy ones, not quite getting there as stocks rose this morning and have stayed relatively consistent throughout the day. as we look through the market trends and figure out where that jobs report is being felt, one of the strength areas today is in retail. we have a endeavors group of retailers doing well from the department stores like nordstrom to some of the manufacturer michaely retailers like kors, under armour, and l brands wrapping out our list. the holidays well, plays into this as as well as --, which show robust demand potentially. if you look at retailer for the
past several months, we have seen it start to outpace the s&p 500. and orange,s&p retail in white, and it started taking off about a month and a half ago. we should point out that amazon and netflix are in this particular index. it is not just the more traditional retailers that other kinds of consumer discretionary and online retailers as well. another stock i want to point out is having a big today move, sage therapeutics. we talked about the stock yesterday in our stock of the segments, and the stock was up sharply yesterday, about 70%. it is gaining today for a two-day gain of 79%. that is nothing like the gains we have seen another outlet, bitcoin, which we have been talking about a lot recently. bitcoin futures start trading sunday night into monday in chicago. that will be tied to the prices at one exchange, the gemini exchange, run by the winkle lost
twins. ss twins.inklevo but another problem was that going, there are a number of exchanges with different prices. here are a number of different exchange fees, and just on point base, one of those exchanges. consistent one a between them. in particular, we saw that gap widen in trading yesterday. it is highlighting one of the issues with bitcoin. typically you see these gaps as much tighter, you see some people try to take advantage of them, but these gaps are so wide it is a bit unusual. one of the challenges as we start to see these futures trade, julia. julia: you are saying yesterday exchange it ise effectively in a bear market. let's get a check on the bloomberg first word news this afternoon is with -- with mark crumpton. brexit.breakthrough on
this and six months of intense negotiation's on both sides. this includes a guarantee from britain that there will be no hard border between northern ireland and the republic of ireland. , whorish prime minister praise the deal, said it is time to look toward the future. -- >> brags that, by nature, has strained relations between ireland and the u.k.. is to make sure we get through that. the closeestablish friendships that should exist between britain and ireland and the british and irish governments. today's -- mark: today's breakthrough clears the way for talks in what most businesses are interested in, trade after brexit. -- plans to leave the white house following president trump's first year in office. that is according to four senior officials.
force has been a driving behind the middle east policy and is exiting on good terms with the president. discussed. trump have her departure and are working on an arrangement for her to continue inviting you demonstration on middle east policy. franken announced his resignation thursday, following allegations of sexual misconduct. the lets the a, a former presidential candidate, became -- last republican as the un security council met in says so -- special session, deemed the u.s. and israeli flags. president trump also promised to move the u.s. embassy to jerusalem from tel aviv, where most countries maintain their embassies. and east envoy told council members that the u.s. decisions
creates a risk of escalating violence. global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am mark crumpton, this is bloomberg. scarlet? scarlet: thank you so much, mark. coming up, we have ellen zentner joining us to talk jobs. 228,000 jobs added in the month of november, and the local implications of the van slyke brexit as well. this is bloomberg. of brexitmplications as a. this is bloomberg.
of the biggest business stories in his right now. dollars at stake will have to wait. steinhoff has delayed a meeting 11h lenders until december -december 19 due to accounting irregularities that are keeping it from publishing its earning. bitcoin's surge has the government tuning in. spoke to bloomberg television earlier. he said he does not a serious risk for the cryptocurrency at the moment. of course, bitcoin futures began , and weon sunday night will keep you posted on those developments. that is your business flash updates. tepid solid hiring, but wage growth. the u.s. economy added 228 thousand jobs last month, more
than forecast. the unemployment rate held steady at 4.1%, as expected, and wage gains continued to disappoint. average hourly earnings increasing 2.5% from a year earlier. joining us now is ellen zentner, chief economist at morgan stanley. great to have you on the stove. -- show. this of the first time we've had clear statistics even the storm we have had for the past couple of months. but no surprise to you, now that we saw the soft labor wage growth coming through. ellen: this was a great report. there were a lot of details i like event. i think some have gone a little overboard with the week wage wage growth.k if you think back to last year, last year at this time wage growth year over year 3% by the end of a year. at it in terms of
euro per year, that is very difficult. it is going to get even more difficult we get the december date on which is next month. scarlet: so it goes back again? ellen: it is difficult,. we are not out of the woods yet as we get into next year and think over the year-over-year,. you see an acceleration in 2018. i get that, but we have also seen the softness in the economy in the first couple of quarters of the year as well. are we going to get that again, and is the wage growth going to come in spite of that? ellen: we kool-aid it, every time the bureau of economic analysis says we know there are seasonal adjustment is used bizarrely in the first quarter gdp data until it comes in weak, and every day this year we have corrected for that, and then we go by with another weak quarter, but it is made up in the subsequent quarters. i think that much like the
constant threat of government shutdown and the like, we have come to expect this weak quarter of gdp and look through it. i'm not sure that will have a bearing on market participants. i think inflation at the end of the day is the ultimate focus. why there is so much attention growth ink wage today's report. but you have to weigh that with the unemployment rate is so low. as we turn the corner into 2018 we will not -- it will not be long until he dropped to 83 handle there. we are creating 200,000 plus jobs a month. we are going to see that the unpleasant rate move -- unemployment rate move over. julia: are we making too much of the numbers here in the concern of the numbers? i see them as a sentiment as well as far as expectations are concerned. if we are talking about a lack of wage growth, it has this knockdown effect. ellen: the way i think of it is there are many things going right in the economy.
growth is above potential and has been in line with the forecast, the employment rate keeps moving lower. financial positions are easy. everything seems great and we are heading in investment upturn with better productivity numbers. pumpe is a lot to fist about in this economy when it comes to inflation. and inflation is the tried and true economic. , you get stronger wage growth -- that leads to price economic theory, you get stronger wage growth and that leads to price -- yeah. that is where you are going to see wage growth must moves higher. to expect higher, broader inflation and more rate we have beent: trained to well. the fed has been trained as well, so what does it mean when it comes to the feds sense of urgency for not just december, but for 2018? ellen zentner i think -- ellen: i think there will be a
difficult balancing act for the fed. everything falling in line with what they would expect to see, and do not want to sit on your hands and do nothing because inflation is low, but because inflation is low you do not have to speed up either. it is the right recipe, the incoming fed chair powell next year will look at it, and it will still got him on that gradual approach. we should stick with a glad jewel -- gradual approach. i can tell you about the headlines of bitcoin each day, and the discomfort that might get some policymakers of gosh, is this unbridled enthusiasm, are investors going gangbusters with this one company, is at the animal spirit? whenhas to unnerve them you are sitting here. it is a low interest rate and easy financial conditions. if i was a policy maker, that does not give you much comfort, the headline we are seeing
around bitcoin. scarlet: ellen have a stick with us because we want to talk about the fiscal side of the equation. the u.s. government will remain open at least for now, for this week. julia: two weeks. scarlet: two weeks, thank you. president trump signed an executive spending bill that will keep the government running through december, which gives them just two weeks to work out there differences -- the differences. doug, talk about this budget deal. does this change the scope of what the trump administration and congressional leaders are doing when it comes to tax reform -- and by some some time, they kicked can down the road as we expected, and tax reform can continue as planned. it has do not think settled anything, really. as you say, it just buys time. they are very focused on the hill on tax reform. they want to continue with that. they have devoted very little
attention so far really to the other set of issues. they now have two more weeks to do that. that is not much time though. julia: and i wanted to talk reform spillover effects we will see there. we are struggling on this show to find anyone who believes it will be more than a short-term juicing of the economy rather than having a longer-term impact of growth. i know that you gave a very deep analysis of the rates in the tax cuts included, there was no net impact on growth. can you compact that for us and do you think the thing we are seeing with tax overhaul today, that precipitate stronger growth down the line? there are two way the tax-cut can boost the economy. one of them is the short-term approach, which is to put more money in the pockets of consumers and businesses so they spend a little more. the other ways to create incentives for the kinds of investment that would provide a long-term increase in growth. likethis tax cut will do, some previous tax cuts, is
provided bit of short-term boost. its effect in a longer-term is likely to be quite muted. when cbo and other agencies who have brought objective, factual-based lenses to this kind of analysis, we have found in the past that those -- most tax-cut have small effects on long-term growth. it is hard to change incentive that much to boost investments growth and productivity growth in the long run. most analysts who look at this tax bill or this pair of tax bills in the house and senate think there will be small effects in the long run, positive effects in the economy, but very small effect. i think that is exactly right. the short-term boost is maybe a good thing, as you have been discussing, an economy with an unemployment rate that already seems likely to fall below 4%. is not reallyoost needed. we need the long-term productivity growth. the short-term boost only the fed to tighten interest rates
faster than they would otherwise. scarlet: doug mentioned small effects, ellen. 2018ecently raised your estimates by 2/10 of 1%. doug: -- ellen: we had already folded in the previous assumption that we were going to get some lift from fiscal policy, more money, as doug said, and consumer posy pockets- in consumers' in particular. and in a hurricane funding we have seen, and the defense bending cap being race. it is not a forecast of a new day because of tax policy relief -- i know something doug has done a lot of work around, multiplier effect. talk aboutonomists small or large impact, we are talking about the multiplier effect. late in a business expansion and going back to the unemployment rate is being indicative of that, you do not get as much bang for your buck. it is not the time you do fiscal
we save that don;t ammunition for the next downturn, but we choose to put a low multiplier on it. it comes down to what low multiplier to economists want to choose? that is where you get the big forecasts and the smaller ones. julia: we are looking at some form of dynamic squirming -- scoring in the hopes that growth will help you pay for the tax overhaul. of the controversy, the elimination of the single mandate. that has ties to a lot of the work you did around obamacare as well. what do we need to see next year you going no -- year? i know that susan collins has made it clear that steps are taken next year in order to address what needs to be done to stabilize the market here. what do you need to see? are right. taking away the mandate to buy health insurance will cause some
healthier people to no longer buy health insurance. that has the risk of destabilizing the insurance markets and the exchanges. senator collins i think is pushing in the right direction, but whether enough of her colleagues will come on board to support the changes she wants is very unclear to me now. i am not sure just how much credibility she should place on the big promises to do something when many of her fellow senators and other people in the house have been unwilling to take what i think are common sense steps to keep those insurance marketplaces stable. the federal government has to start by at least continuing to insurers payments to to cover the costs of the subsidies for lower income people. -- ares required required to pay under the law, they are continuing to pay under the law, but the admiral government is not providing the subsidy that they are supposed to provide for the insurers
under the law. president trump cut off those payments and they need to be restarted. julia: great to chat with you, thank you so much. doug elmendorf, dean of harvard kennedy school. -- how the taxe cuts are hitting the housing market and the broader impact in trade. what is going on as far as the rate markets are concerned. this is bloomberg.
it has been a huge thing for us is releasing our global outlook september of next year, we could see a flat two inverted yield curve. that has a lot of attention. if we are used to historically an inverted yield curve spells trouble for the economy, it means investors are betting we are heading south. we need to ask ourselves is that really what it is telling us today? on our forecast, inflation is rising. we have a moderate rise in core inflation, but we do not get to forecasted, but the fed continues to march rates up next year. anchor theng to help long and while short rates are moving up. you also have to contend with global flows, the global savings glut. there is still value to be held and found in the long end of the yield curve, particularly compared to a the other
countries long-term rates. you have financial repression around the world, and the fed is shrinking the balance sheet, but globally, if you think of central bank balance sheets as a global bank balance sheets, it is rising, although the fed is shrinking. julia: look at this, it shows you the two-year, five year, and 10-year, and the yellow line shows you that the 10-year has been stuck at that level. and that you and the five have been rising, the tent -- the two and the five have been rising, the 10-year has been flat. the fed is looking at this and say do we continue to hike rates once the economy is continuing the heat? but the yield curve flattens and potentially inverts. ellen: i think you will have a they, heated discussion next year among the
fomc and how do participants view this? there are some that have started to show their colors on this that are. you have bowler from the st. louis fed, parker from the philly fed, kaplan from the dallas fed, and they have all come out -- i might take some liberal fara phrasing -- paraphrasing -- i do not want to vote for a rate hike that will move the yield curve. historically, the yield curve has been one of the best leading indicators of recession. but others have said it is probably not a problem. i think this will be a heated debate that we will follow. julia: we will follow it with you. , chief economist at morgan stanley. play more to come, this is bloomberg.
note, gaining after crude imports at a record last month. if you look at the week, it has been a choppy week overall for wti. oil down more than 1.5% in the past five days, the worst week since early october. they have been in all -- unable to shake off this week's inventory report, which showed inventoriesoline and expansion of u.s. crude production. to metals, gold briefly spiked higher, but ended the day down, as you can see, off by a quarter of 1%. falling about 2.5% for the week as the dollar strengthened and anticipate the rate hike at the fomc meeting next wednesday. if you have inside the terminal, these bars show the weekly percentage changes on gold prices, and that bar on the far right is the biggest weekly drop four-ball since may. it is also the third straight week of declines for the metal.
let's get a check on the first word news with mark crumpton. presiding over the ceremonial swearing-in is kirstjen nielsen is ever marry of homeland security at the white house, president trump praised his declining immigration rates to the u.s.. vice president pence administer the oath of office with much of the west wing senior staff joining her family in observance. u.s. ambassador to the united nations nikki haley address an emergency meeting of the un security council today. the session was called over the u.s. decision to recognize .erusalem as israel's capital ambassador haley acknowledged not everyone agrees with the decision. >> to my palestinian brothers and sisters, i can tell you with complete confidence that the united states is deeply a peaced to achieving agreement between the israelis and the palestinians. we have demonstrated that
commitment over many years, and with the investment of large quantities of financial resources and diplomatic energy. sadly, peace between the two sides has not been achieved. but we will not give up. our hands remained extended to you. congo, at least 14 u.n. peacekeepers were killed. more than 40 others were wounded. -- peacekeepers were from tanzania. single the deadliest attack on a u.n. peacekeeping mission in recent memory. global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm mark crumpton, this is bloomberg. julia? julia: the u.k. and eu have reached a deal to advanced long stalled brexit talks on trade. that opens way for the negotiations to begin. how will it impact the financial sector?
spoke to manus cranny in an exclusive interview. >> i think this is good news to come pre-christmas, and now we can have a good conversations about how can we trade with the eu. i think that is the important piece. i think this is good news for all businesses today. >> in the details this morning, we talked about a two-year transition. so is a major ceo with an investment bank with major business to do in europe, is two years enough? >> it will be as long as we get details early. businesses like ours like to move forward as if we are not going to get any form of deal. we have had to move forward to look at the worst scenario so we can build a bank that works for our customers. if we get a longer transition and get the rules established in there, that is really good news for us. but we have to move forward anyway. the u.s. levy institutions,
your brethren, the people who runs the institutions -- can i ask you about institutions, your brethren, the people who run the institutions here. if they run in the first of the year, with that make you pause for thought? >> we have to give in a position of certain operations so that we can look after customers no matter what happens. this does help. we can actually slow down activity if we take this -- think this transition is going to be a real three-year transition and we can find out what the rules are. >> the canadians do not have a financial services element, so this is mission critical for you in terms of regulatory alignment. we are hearing alignment alignment. take me through your vision for alignment with europe. x we are running on the same rules of europe, having been part of the community.
it really is what is the difference going to be? -- and some people want a lot of difference so we can be more flexible. given one of our major trading partners, the closest we can get to the absolute -- from a financial services perspective and a customer perspective as well. mcewan.hat was ross ellen zentner is still with us. is there a thought we could avoid a hard brexit in the year comeu.k., how does that into asynchronous growth story for the united states? doug: i think -- ellen: it continues to drive stability, less relatively, which promotes economic growth. -- economists like to see low economic growth. i think it promotes a stabling
growth backdrop, and it is encouraging with the political side of the global economy and the economic side of the global economy are working together. julia: it has been so long. scarlet: here in the united states, you also have the tax overhaul. we have fixated so much on the corporate tax cut to 20%, maybe the but what about individual side? that will change the way people spend and therefore drive the economy. ellen: it is strange that the consumer is 70% of the economy and we are so focused on what is going to happen with the corporate side of this. tax policy, if this package passes before the end of the year, by the end of the year, we have seen what the irs in the literallyin hours, 24, 48 hours, they can have a new directive out of withholding to businesses to businesses will adjust their withholding schedule. that means in january you start
bringing home bigger take-home pay. scarlet: and people start spending. ellen: low to middle income households will spend more of it because they are more cash strapped and have tended to save less and spend more. but the upper-income households we are seeing uncertainty of what this tax package would mean. middle and lower candy gerrity they will have more disposable income out of this. there is uncertainty for the upper income groups. don't get me wrong, i am not playing a fiddle here. i talked to a lot of investors and folks in my industry, and there are a lot of upper income group folks in our industry. they are downright worried and uncertain about what does this mean about my bottom line? there is less certainty around will the state and local tax reductions stay in or be taken out, will be phased out at a certain income level? all of those factors lead to
uncertainty. what does uncertainty leads to? less spending. clarity onet more what this tax reform means for you. i think luxury spending in the u.s., where we have tracked an inflection point this year alongside the s&p 500 rising, that becomes a difficult path alongside certain tax policy outcomes for next year. scarlet: this seems like something we are not talking about that markets are underpricing the risk of as well, especially when you look at the push for equity in global markets. a lot of these luxury names are outside the united states. it could be that investors start looking at luxury names that would be affected because they are more concentrated in the coastal regions of the u.s., where that state and local tax deduction would matter. i can see investors starting to think that way. i think also, it is an uphill battle overall to have some kind of overweight on consumers discretionary when we are late a late cycles is
consumer, and that would initially dictate a slowdown in consumer spending. you might have not that exciting of a story, where we were late cycle consumers, consumer slowing down, but now we are getting a boost in disposable income that keeps that slowdown moving sideways instead of getting worse. exciting an investment story from that perspective, but i love seeing more cash in the pockets of u.s. households. i think it is something supportive for the outlook that is little covered. julia: what about housing? we have talked about state and local tax. it will be interesting to see what conversations you are having. your growth upgrade for next year is 0.2 percentage points, barely an upgrade. woven into that? i know it is difficult to tell a this stage as well, but how can you gauge this impact? we talked about a whammy on both sides, whether it is less people coming to market or those being able to buy.
now you are getting into the world where economics is difficult. moving thingst of we have to take into account. more pockets, more money in the pockets of consumers, that means that affordability is easier. that would drive more ability to purchase homes. if you are time, removing that beneficial mortgage deduction for a certain segment of the population, you are removing the incentive to move and by bigger, bigger, bigger, which is a -- has always been the case in which deductionse interest rise. you might end up with a plethora of oversupply in high dollar homes, because you do not have folks stepping in to purchase those properties. but then you see a shift of homebuilders moving toward smaller, lower priced
homes, more in that middle price -- i don't know. there are a lot of moving parts and pieces. but you said zero's, so you have not put in an effect. ellen: the housing recovery is ongoing, it continues to provide a change to the economy. i cannot price and something that you would see at of the numbers out of this policy. when we get final passage and final legislation, we will turn to our housing strategist and say ok, what you think? what is this mean? housing meant a lot more to the u.s. economy in 2005, 2006, 2007 that it has now. hasn't recovered to the point has it recovered to the point where it was influential as it once was? ellen: it reached record highs of 7% of total gdp in 2007, but there was putting cash out of the home and moving and shaking in the real estate jobs in construction jobs it created that provided a big boost on top of that. shranktial investment
from 7% of gdp to around two point 5% gdp. it has now recovered to 3%, 3.5 percent of gdp, which is closer to normal but we are not getting effectof a knock down either. households are just starting to tap into the equity in their homes, because we moved back to a point where we got more equity in the homes in the aggregate so people can tap into it. julia: we cap into the things in but it is, critical and how to affect the economy. -- ellenalan zinter entner, thank you so much. up next, the coin is ending a wild week. what is futures trading mean for the volatility of this cryptocurrency? in one week. that is even after the takes swing. this is bloomberg. -- big swing. this is bloomberg.
julia: this is bloomberg markets, i'm julia chatterley. scarlet: i'm scarlet fu. a special edition of our start becauseock of the hour, julie hyman is focusing on bitcoin. and we managed to convince ellen zentner to stick around. julie, what are we seeing? >> a bit of a decline in the trading today, and most of the market participants i have been speaking to are bracing themselves. we do not really know what to expect. so much has been unprecedented with bitcoin that, like everything else, when you have the introduction of futures we
are not sure how it is going to go. there isn't it -- a bit of trepidation, anxiety about the start of trading. to give you the details, it will start trading at 5:00 p.m. chicago time on sunday evening, 6:00 p.m. new york time. it will trade pretty much 24 hours from then. settlement will be at 3:30 every day, 3:30 chicago time, just like we see the commodities contracts settle at that time. what is also interesting about this contract as opposed to the later,ich trades a week they are pulling your prices from one source, the gemini voss twins'he winkle exchange. pull from a number of other things on the 15th, including point base -- coinbas e. scarlet: the way i guess we can fold this into your world,
ellen, is how the fed and central bankers think about bitcoin and pull into that analysis of where the economy is reaction there might be to this cryptocurrency, as a class, or asset category? is one thingre monetary policy makers have been extreme merrily honest about, it is that they are terrible -- extraordinarily honest about, it is that they are terrible about finding bubbles in real time. we know how to clean up the mess, and my husband will tell you that as well. but for monetary policy, this is the type of behavior -- policymakers, this is the type of behavior that raises eyebrows, where they start to ask questions. is this irrational exuberance? something new wants about one particular company, one particular investment? does it have systematic risk? movementis a sudden
out of bitcoin, people decide it is worth nothing tomorrow, does it have a knock on effect? they are asking these questions why? because they are concerned about financial disability -- stability. they have been on a path of tightening, financial conditions have been easy, and one of the arguments chair yellen made is low inflation, you still raise those higher interest rates need to get to the crack of the economy and the out -- knead out bubbles you cannot see forming. this plays into the financial stability concern. they are asking questions. scarlet: i have not heard anyone argue it is not a bubble at this point. it is just a question of when it will pop, if it does, and then it might go right back up again. i spoke to someone last night who said we have seen bubbles before, this is a bubble, it
will pop and it will go back up again. just because it will pop does not mean it is not viable, it means the price goes down. me is what fascinates this divergence and what people are saying. speculative placing, block chain, india, not allowed, russia, pyramid skiing. this scheme. it -- about itat as a rational currency and around the investment it. so much.len, thank you coming up, a sneak peek at the businessweek cover stories. the test lab for fake news might not be where you think it is. from new york, this is bloomberg.
problem is emerging. is the socials media capital of the world, but now he is using it to silence one of his critics. this is the subject of this week's cover story. what happens when the government uses facebook as a weapon? caroline and i spoke with co-author carol esser. >> this woman is a journalist from the philippines, and has been an investigative reporter there for over two decades. about six years ago, started a company, and online news site. it does all kinds of different stories. they do investigative stories, lifestyle stories, and a lot of political news as well. julia: so she really rose to prominence, if we look at january of last year, when she combined with facebook to host a debate,tial campaign
and only one candidate turned up . we know that candidate very well. all fivevited candidates, and some of them except it, but as the event ,neered, several -- neared several of them canceled, and finally they left only rodrigo duterte as a single candidate to show up to her event. across 40 college campuses across the philippines. it was live streamed on facebook , the question for the candidate , dutere, they were crowd sourced on facebook. there was a very dynamic relationship between social the site for this particular event, and it did give duterte a mainstream avenue to broadcast his views on lots of controversial topics. he is ae know controversial character in terms of the policy has enacted that
she has enacted, but when did maria recognized something was being used as a weapon rather than a tool, and get concerned about news appearing that was not actually real? campaign,n in the there was a lot of aggressive use of social media. --ple who are proterra k pro-dutere supporters online verytarget others in violent, aggressive manners. there was a kind of traveling aspect to the campaign early on, and there was a fake news elements. stories started circulating online and in social media that were not true. julia: what happened to maria when she started to try and tackle the messed up with what she saw as a kind of propaganda saw istackle what she kind of a propaganda war in the government. as our company at risk now for
trying to question the companynt and -- is her at risk now for trying to question the government and their motives and policies here? story is fascinating in part because it has been this evolution. she started reporting about what she felt like was a propaganda machine being used by the government in order to go after critics. when she started writing about the propaganda machine essentially went after maria. it went after her. they started sending her these messages online and on facebook, sending very vile things. facebook did not do much to stop that at the time. but as the attacks escalated, as she started becoming more critical of the dutere government, dutere government singled out her website and one of the state -- in one of his state of the nation addresses. he singled out her website and started saying the company was not actually following all of the rules and the laws in the country. it sort of escalated from there.
you can read the story in the latest bloomberg businessweek and hear more from the reporters and editors every saturday on sunday on bloomberg television and radio, and on app.mberg.com and on the o scarlet: coming up, michael holland on the bullish tone. also, he's become china and the efforts to deleverage there. from new york, this is bloomberg.
markets." ♪ we are live in bloomberg world headquarters in new york over the next hour. here are the top stories we're covering on the bloomberg. bitcoin repairs for primetime with the cryptocurrency's debut just around the corner. ons, deutsche's deep dive 2018. we discuss market risks for the year ahead. and are the stars aligned for u.s. stocks? markets resume a bullish tone. we're one hour from the close of trading on the day and the week. ,ulie: the bullish tone particularly for the nasdaq which is paring some of its
from earlier on the day. just a little cause -- cause -- though we are still seeing the dow jones and s&p trade near records. the groups on the move, most are in the green and those falling are not falling by much. telecom, health care, and financials are helping lead in terms of groups that are performing the best in today's session. also individually, the stock contributing the most on an is microsoft.is we have seen strength within large-cap technology today. microsoft itself is up by about 2%. the maker of a costly rare disease drug is up today after the new york times reported that elliott management has built up a stake in the company and could
start a proxy fight to claim board seats, particularly -- potentially pushing for changes, so stock prices reacting to that. we've been talking about that coin, so i decided to look at the weekly chart of the currency and the 40% gain that we have seen, but if you look particularly at yesterday and today, there is a lot of volatility hidden beneath the surface of this enormous price action as we have seen big swings here and maybe big swings to come as we get a look at the futures action. as we look at the digital currency, let's talk about real currency, the paper stuff. the dollar is up for its .trongest week if you look at the bloomberg dollar index, incidentally, gold is having its most negative week since may. interesting how we are seeing currencies and alternative stores of value performing this week, ladies. scarlet: love that checks the
position between bitcoin in the dollar. thank you. long-term investor michael holland, founder and investor of holland and company, joining us now. in the wake of the jobs report, i was reading that bank of america says wage inflation is needed for sustained rotation losers.winners to qe do you agree with that assessment? mr. holland: i read exactly the same thing you did. i was not sure what the connection was, why it would be so direct a causation, but it makes some sense, i guess. if you do get a little bit of traditional growth, meaning that you would get that -- primarily, what i think the author was saying, maybe unintentionally, was if things keep going the way they are going, they are owing to keep going the way they are going.
you have a goldilocks kind of environment where we continue to have global economic growth. all the numbers that came out interday and today were support of the continuing thesis, and in can dish -- and we do not have growth on the wage front. it looks like a continuation of the old story. scarlet: i needed a way to bring in the jobs report, so that was a way. mr. holland: glad to do that for you. julia: if we do not get inflation and things stay the same, can the fed still pull off rate hikes next year? will people ask questions of the recovery? mr. holland: the right question of the fed is why would they be raising any rates where we have this wonderful world where things look to be getting tighter on the wage front in terms of availability of people? on the one hand. on the other hand, we remain with basicallyd
crisis level interest rates, which are manipulated by the head, which means we do not have any normal price discoveries, so i'm going to take you to the next segment, perhaps -- i don't know -- but that is what causes things like bitcoin. scarlet: we will get to bitcoin shortly. holland: but you do get distorted markets. scarlet: all right. but i want to talk about one of the big risks in 2018. they keep talking about the collapse of trade talks possibly. when it comes to u.s. and china trade, there's a lot of questions out there. what is your biggest fear when it comes to how trade talks may involve? there's been a lot of threats on both sides. mr. holland: one reason markets are ok, forgetting about the headlines and the media, particularly in "the new york times" and different places looking for a way to present the story that may not be quite so positive or the markets -- with respect to trade talks, we have already seen a preview of coming
events. trump's tripwith , that was like a lovefest. instead of the campaign talk that trump did about this stuff, we have a trade numbers this morning with china. they continue to be gangbusters, , yet, we have not heard anything on the tweet market from vista trump. i think what we end up with is probably less bad stuff than we were originally poised to hear from his campaign rhetoric. julia: the default position is the deleveraging that needs to , if china can calibrate this effectively. the counter argument to that is something bloomberg has been talking about, which there is a whole host of big corporate and china. their position is the best it has been in a decade. mr. holland: exactly right.
julia: we're just not watching it, we are not fixated on it enough. mr. holland: we had a board meeting this weekend in london. i have been investing their almost 25 years, and i can tell about china are as old as i am investing in that market. when we talk about what the real picture is, as you just described, the numbers are actually not daunting. they are actually to the contrary. scarlet: speaking of the real picture, a chinese conglomerate -- we know that in the past, china has a less strategically some companies to default. message to to send a everyone else. there's a lot of things china has figured out how to do this -- there's a lot of faith china has figured out how to do this without sparking contagion. mr. holland: they have always been able to contain within the system there quote unquote credit problems.
they do not have any external .ebt it is in the system. it is not out there for the world to decide what to do. the chinese authorities, the mandarins decide what to do and they have been able to handle it beautifully for the last 25 years, and i think listening to the people this week talking about what is going on in china, right now, that is continuing. julie: interesting. we will pick this up very shortly. michael holland of holland and company is staying with us. bitcoin, whereon with had a nice tease, but for now, let's get a check on the news. going on withg is bitcoin? hadn't heard. paving the way for the next phase of talks for a framework for a post-brexit future.
the european commission president announced a break today and says he has been assured it is backed by the u.k. government. >> this result is, of course, the compromise. the result of a long, intense discussion between the commission negotiations and those of the u.k. both sides have to listen to and show a willingness to compromise. this was a difficult negotiation for the european union as well as for the united kingdom. mark: and paving the way for eu leaders at a summit next week to open the second phase of brexit negotiations covering trade and the transition period. the german government welcomes the interim brexit agreement as a step forward but is cautioning that the second phase of talks will be highly complex.
a spokesman for chancellor merkel says german officials will examine the terms of the deal carefully. eu leaders are expected to the second stage of talks focused on trade next week . u.s. allies in the united nations security council are criticizing president trump's decision to recognize jerusalem as the capital of israel. britain's ambassador says the decision is unhelpful to and sweden's ambassador says the action contradicts international law and security council resolutions. the french ambassador also expressed regret while japan's ambassador said his government opposes "any unilateral measures." they all stress jerusalem's status is to be decided in direct israeli-palestinian negotiations. a 21-year-old gunmen disguised himself as a student in new
mexico to get into a high school and kill teen of students had been on the radar of u.s. officials. authorities say he had legally purchased a handgun at a local store a month ago and planned the attack. he left a message on a thumb drive found on his body that details his plan to wait until the students got off buses and made their way to class. global news 24 hours a day powered by more than 2700 in oversts and analysts 120 countries. i'm mark crumpton. this is bloomberg. so much.thanks coming up, more insight on the bitcoin boom with michael holland. also, julia wants to still talk about china. this is bloomberg. ♪
bitcoin is preparing for the big primetime -- i would say the big-time, but we have to be cautious. markets go live with futures contract on the cryptocurrency on sunday and we are back now with michael holland, founder and chairman of holland and company. bitcoin thoughts? mr. holland: article this morning 5:00 a.m. on bloomberg. scarlet: thank you for the shameless plug. mr. holland: it was one of the first things i read. 1000 people, according to the author, own 40% of the bitcoin market. and there is no such thing as insider trading in it, so they can do whatever they want, which means the volatility could be in overuture when you are 15,000, having been at 1000
months ago -- the volatility from these people potentially doing things that are not illegal to the pricing market -- it is obvious to anyone. julia: does the arrival of a futures contract help with that in a sense? it gives opportunities for those who perhaps want to invest in bitcoin but can do it the only via the-- can do it futures? mr. holland: yes, but the viewpoint for me is this is opening up more markets for more people, which is what happens when you get a lot of money flowing to a certain area and people get excited, and it ends badly. for the people coming in now -- julia: the late arrivals. mr. holland: there's a wonderful book called "extraordinary: popular delusions and crowds" --
it's one of the first books i ever read. before anyone buys bitcoin, they should buy that book. scarlet: sounds appropriate. do you know anyone in your sphere looking to get into bitcoin action? bitcoin,nd: not to buy but goldman sachs, jpmorgan, all these companies looking at this. everyone has to look at it because of the phenomenon, but black chain technology, the stuff pushing this is actually, i think, already in people's minds as ways of doing the financial system in the future, so that may well happen. this thing that went from one to 15 in a few months is separate and distinct from the technology that i think will be part of our lives in the next few decades. julia: to be fair, a lot of big banks are looking at the futures and saying due diligence has not been done here. there has not been enough time to understand how best to deal with this. they are please send you back to china? mr. holland: what a great idea. julia: since the president was
there, they said they will open up their financial sector to foreign investment. they have also reduced tariffs on more than 100 50 consumer products, 140 consumer products. these are big deals, surely. mr. holland: they are huge deals. the one we cited in our conversation earlier was where trump was leading beijing, that they would allow u.s. companies asset management companies, financial companies in china. that has never been done before. for the obvious reason, they want to control everything. the fact they were willing to do that as trump was leaving informed my conversation with you before when i said things are better in china than people give them credit for. julia: it can take up to three years, in certain cases five. why didn't the u.s. run with that?
why didn't the president take credit? mr. holland: tweet him right now and find out. scarlet: i think it is a missed opportunity. mr. holland: we had the same reaction when the news came out. was one of the biggest things i've ever seen and they did not take credit for it. for someone who is so savvy as this administration is, i was shocked they did not get more credit. it remains big deal. president trump, not sure to take credit, needs to take credit for this one. scarlet: yes, that was a missed opportunity. thank you so much, michael holland. let's get to our bloomberg is this flash. mckesson's board minutes showed systemed to monitor its or suspicious opioid shipments, even after agreeing to do so in a 2008 settlement. mckesson also allegedly shirk
responsibility for the growing opioid epidemic, seeing it as a matter "to be addressed by the federal and state governments." suits fromozens of cities and counties. israeli drugmaker teva pharmaceuticals is considering cutting 10,000 jobs or 15% of its staff. according to people familiar with the matter, they want to cut expenses by up to $2 billion in the next date of years. it has about $35 billion in debt. it's the world's biggest generic drug maker. we were just talking about president trump. he tweets that fines against wells fargo in a drug lending case -- in a mortgage lending case may be more substantial than previously thought. president trump said the fines would not be dropped. your business flash update. julia: still ahead, time for options in sight this is
proposition that people seem to be betting on at one time or another. what is the challenge right now, or is it a challenge to kind of find good value stocks or stocks that will have appreciable upside from here? >> it is more difficult now to play int reward to risk your favor if you are bullish, which i remain very bullish, so you have to be very selective and very patient. we had new all-time highs on monday. gave usseeing -- that caution. throughout the week, we recovered half of that selloff and we're above that midpoint, and we are not that far, we are positive on the week. the s&p i do not think is over. we see these unwinds, but the momentum was so strong, that is only natural. ally selloff we have seen his the distance on that old top.
julie: are you seeing other indications, maybe not a top, but the rally is getting a little bit tired? mr. knuckman: i don't think so. the fix is still trading around the 10 level. we have been trading between 10 and 12 for seven whole months. -- the vix is still trading around the 10 level. every time it does bounce, it gets flattened back out. i'm going to use the exact phrase they used in the cboe press release. there was a blip in the vix pricing a couple of weeks ago, so technically, that was not a new low. taken out july lows officially yet, so we still have more downside in the vix and upside in stocks. let's talkking of, about your trade of the day, one where we could potentially see some upside. cleveland cliffs, a company that minds iron or and coal. -- iron ore and coal.
where do we go from here? mr. knuckman: it's talking about value and better reward to risk. it is all about infrastructure now. that is what we will be hearing about every day now for the rest of the year in the next political push. looking at this stop, i'm looking at a january of 2019, again, before the criticism comes in, i am buying enough time to be right because options volatility is very low. it isn't in the money call. a five dollar call for about $2.25, so that puts a breakeven about $.90 away with 400 days for things to happen. knuckmant's the signature move. stickuckman: i'm going to with what got me here so far. julie: what works for you. thank you so much.
capital of israel. the council says the action violated international law. >> the united nations position is clear. jerusalem is a final status issue for which a comprehensive, lasting solution must be achieved through mutual agreements. eight states requested the emergency meeting. president trump also plans to move the u.s. embassy from tel aviv to jerusalem. meantime, thousands across turkey are denouncing president trump's decision to recognize israel capitol. thousands gathered around a mosque and marched, chanting slogans protesting the united states and israel. german chancellor angela merkel's refusal to